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Federal appeals court gives Colorado marijuana credit union another chance

A federal appeals court has breathed life into a plan hatched in Colorado to open a credit union for the marijuana industry.

A three-judge panel for the 10th U.S. Circuit Court of Appeals on Tuesday vacated a district court ruling that nixed Denver-based Fourth Corner Credit Union’s bid to receive a master account with the Federal Reserve Bank of Kansas City.

Fourth Corner Credit Union first formed in late 2014 with the goal of serving licensed marijuana-related businesses, which have had trouble accessing financial services from traditional banking institutions. Any credit union or bank needs a Federal Reserve master account to operate.

The judges remanded the case to the district court with instructions to dismiss the amended complaint without prejudice.

“The district court dismissed the amended complaint, reasoning that Fourth Corner would use the master account to violate federal drug laws. This ruling was erroneous,” U.S. Circuit Judge Robert E. Bacharach wrote in one of three opinions published Tuesday. “The district court should have presumed that Fourth Corner would follow the court’s determination that servicing marijuana-related businesses is illegal. And in the amended complaint, Fourth Corner essentially promised to obey the law that would be set out in the eventual declaratory judgment.

“In these circumstances, the district court had little reason to jettison the standard on a motion to dismiss and rely instead on suspicions about what Fourth Corner would do.”

Officials for Fourth Corner and the legal counsel for the Federal Reserve could not be immediately reached late Wednesday for comment.

It’s unclear whether the Federal Reserve would want to appeal and whether the Supreme Court would take the case, said Tom Downey, a Denver-based attorney who specializes in cannabis regulations and law with Ireland Stapleton Pryor & Pascoe P.C.

Next steps aside, the 10th Circuit’s decision is telling about the progression of the marijuana industry, Downey said.

While “core issues” like states’ rights and federal drug scheduling dominate, he said the battles are being fought on the margins: zoning, civil RICO lawsuits, banking, employment law and intellectual property.

“I think that this ruling is an example of the normalization of this issue — that this is about banking, not about the federal-state conflict about marijuana,” Downey said.

Fourth Corner received a state credit union charter in November 2014, which allowed it to acquire a bank routing number and apply to the Federal Reserve Bank of Kansas City. The regional bank for the Federal Reserve System denied the application, prompting Fourth Corner’s lawsuit.

This story is developing and will be updated.

10th U.S. Circuit Court of Appeals ruling on Colorado marijuana credit union (PDF)

10th U.S. Circuit Court of Appeals ruling on Colorado marijuana credit union (Text)

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UN Drug Office can’t find a single cannabis drug overdose, despite it being most widely-consumed drug

The United Nations Office on Drugs and Crime (UNODC) has released its 2017 World Drug Report, covering 2015 statistics from around the world. The report finds that cannabis is the most consumed, most widely cultivated and most confiscated drug the office tracks.

Despite leading in all of these categories, UNODC reported zero fatal marijuana overdoses in 2015, unchanged from 2014.

Here’s a look at some of the intriguing stats in the report:

Use

The report states that cannabis is the planet’s most widely consumed drug, with an estimate of 3.8 percent of the adult population using it in 2015. This translates to an estimated 183 million people (with a lower range on the estimate of 128 million and an upper range of 238 million). Other drugs tracked in decreasing order of use include opioids (upper limit of .88% of population), opiates, cocaine, amphetamines and ecstasy. 39 percent of individuals reported in treatment for “drug disorder” are being treated for cannabis.

Prevalence of use varies by country. The report states that in the European Union, about 6.6 percent of people age 15-64 used cannabis in 2015. On the younger side of the demographic, those age 15-34 use at a higher rate of 13.3 percent. Around 3 million adults (1 percent) in the European Union are estimated to be daily or near-daily cannabis users, 70 percent of whom are between 15 and 34 years old and mostly male. In the countries that allow medical cannabis use, past-month, non-medical use of cannabis increased significantly among the population aged 26 years and older, from 5.8 percent to 7.2 percent over the period 2004-2013. However, among the younger age groups (12-17 years and 18-25 years), changes in the prevalence of non-medical cannabis use were not statistically significant and not considered to be related to the measures that allow the use of cannabis for medical purposes.

Cultivation and seizure

The report also found that cannabis is the most widely “illicitly produced” drug worldwide. From 2010-2015, UNODC tracked reports of cultivation of cannabis by 135 countries. For contrast, 49 countries reported cultivation of opium poppy (the source of heroin) and only eight countries reported coca bush (the source of cocaine).

Cannabis seizures were reported in 164 of 168 countries.

For cannabis, in terms of number of plants grown and “eradicated,” there’s a reason it’s called “weed.” In single years reported ranging from 2011-2015, Paraguay eradicated 12,122,750 plants; Ukraine: 7,550,000; Peru: 6,200,578; Tajikistan: 2,180,121; Costa Rica: 1,727,175; Netherlands: 1,600,000; Brazil: 1,364,316; and Jamaica: 1,053,000.

In this file photo taken in August 2015, masked police officers burn cannabis plants in Kurvelesh commune, 200 kilometers south of the Albanian capital, Tirana. Authorities in Albania say they destroyed about 2.5 million marijuana plants last year, four times more than the year before. (Hektor Pustina, Associated Press file)

The United States doesn’t give stats on plant counts but reported that it had eradicated 396,620 indoor sites and 3,904,213 outdoor sites. At a conservative estimate of 10 plants per site, that would be 43,008,330 plants that did not make it to anyone’s pipe bowl.

For opium, the report’s best estimate was 304,800 hectares grown (1,177 square miles) around the world, and for coca, 156,500 hectares (604 square miles), with 97,560 hectares reported eradicated (+45,266 plants in Ecuador).

6,000 tons of cannabis herb and 1,300 tons of cannabis resin were seized annually around the world. More than half of all drug seizures (53 percent) were of cannabis (35 percent flower, 13 percent resin, 3 percent plants, 2 percent other).

Deaths

Globally, UNODC estimates that there were 190,900 drug-related deaths in 2015, (lower limit 115,900 to upper limit 230,100). The report notes that “this is most likely an underestimate.” North America accounts for more than 25 percent of drug-related deaths.

The report notes:

Mostly driven by opioids, overdose deaths more than tripled in the period 1999-2015 and increased by 11.4 percent in the past year alone, to reach the highest level ever recorded. Of the 52,000 total drug-related deaths reported for the United States, those related to opioids accounted for more than 60 percent. In 2015, the death rate from synthetic opioids, increased by 72 percent compared with the previous year, whereas heroin overdose deaths increased by 23 percent over the same period.

While the UNODC noted that cannabis was involved in 16 percent of drug-related emergency room visits in Europe, the organization had no statistics to report on deaths caused by cannabis. The report did list a statistic for cannabis in “healthy years of life lost,” at the lowest rate among any drugs listed.

(UN Office on Drugs and Crime, World Drug Report 2017) (UN Office on Drugs and Crime, World Drug Report 2017)

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Sessions isn’t making America safer. He might be making it more dangerous

Last month, Attorney General Jeff Sessions stripped federal prosecutors of their traditional discretion to fit the punishment to the crime, directing them instead to seek the maximum penalty possible in all criminal cases. Last weekend in The Washington Post, Sessions defended this abrupt shift as necessary to confront the specter of rising crime, claiming “violent crime surged” while “the federal government softened its approach to drug enforcement.”

Don’t believe it. Between 2009 and 2014, crime fell to its lowest level in a generation, even while prosecutors pared back their use of strict federal penalties. Sessions’s new policy will reverse that progress. While it may fill our prisons, it won’t “make America safe again.”

First, let’s set the record straight. The attorney general’s new order replaced an August 2013 memo from former Attorney General Eric Holder, which asked prosecutors to avoid triggering harsh federal “mandatory minimum” sentences in some minor drug cases. Far from the lawless free-for-all that Sessions describes in his column – “prosecutors were required to leave out objective facts to achieve sentences lighter than required by law,” he claimed – Holder’s policy was a modest attempt to pare back draconian sentencing laws. It specifically excluded repeat and violent offenders, as well as defendants linked to “large-scale drug trafficking organizations.” Under Holder, those defendants continued to face the harshest penalties available.

Nonetheless, Sessions argues this initiative led prosecutors to soften enforcement of federal drug laws, causing crime to increase. That doesn’t square with reality. As Sessions’s column acknowledges, drug prosecutions and sentence lengths were already falling by the time of Holder’s 2013 order, and there’s no evidence Holder exaggerated that trend. (The Justice Department’s prosecution of the most serious drug offenders actually increased on his watch.) Nor did Holder’s approach correspond to an increase in crime. Instead, overall crime also fell from 2009 to 2014, when the national murder rate reached its lowest point in decades. It’s true that murder rates rose slightly in 2015, but this was highly concentrated: Almost half the increase in big-city murders occurred in Baltimore, Chicago and Washington, D.C. Data from 2016 shows a similar trend, with Chicago causing 55 percent of the total increase in urban murders. These isolated upticks in no way signal a national crime wave. If federal policy was to blame, we’d expect broad, national increases – not these isolated changes.

Rethinking mandatory minimums did not jeopardize public safety, but instead produced something remarkable: For the first time in 40 years, crime and incarceration fell in tandem. By 2016, the number of federal prisoners dropped by more than 10 percent from its 2013 peak. And mandatory minimum use fell by nearly 30 percent between 2013 and 2016. That’s welcome news in a country that still disproportionately incarcerates its citizens, especially people of color.

Unfortunately, Sessions is all but certain to reverse this progress. With U.S. attorneys now required to throw the book at all defendants, whether their prosecutors like it or not, mandatory minimum usage will almost certainly tick back up, dragging the prison population up along with it. In February, Sessions expanded the use of private prisons, grimly alluding to the “future needs of the federal correctional system.” For Sessions, expanding mass incarceration seems to be a feature of the system, not a bug.

Lower-level offenders – the type of nonviolent drug users spared under Holder – are poised to bear the brunt of this expansion. Justice Department officials have hinted for months they’re planning a crackdown on marijuana, even in states where the drug is legal.

“From a legal and scientific perspective,” Deputy Attorney General Rod J. Rosenstein told a Senate committee last week, “marijuana is an unlawful drug.” And Sessions privately asked Congress to relax a restriction blocking him from using taxpayer money to prosecute legal marijuana use in states like Colorado and California.

Police chiefs agree that forcing law enforcement to spend their time on low-level drug crimes may actually be counterproductive. First, more time arresting, prosecuting and incarcerating nonviolent offenders means less time combating violent crime . From a public safety perspective, would you rather have Chicago police arresting shoplifters, or putting a stop to the city’s spiraling murder rate? Second, prison makes people who have committed a minor offense more likely to commit a violent crime upon release , while leaving underlying problems, like drug addiction, unaddressed. Prison also saddles anyone who passes through it with a lifetime of consequences, making it harder for formerly incarcerated people to find a job or even housing after release. That may make returning to crime more attractive . All of this suggests that we should use prison sparingly – not as the one-size-fits-all solution favored by Sessions.

For anyone concerned about the fairness of our justice system, this is a true crisis. But the attorney general can only use (or abuse) the power Congress gives him. And there are a few ways lawmakers can rein Sessions in.

One option is to revive and pass sentencing reform. With Sessions out of Congress, the bill might have an easier route. Or lawmakers could give judges broader discretion to impose lighter sentences on a case-by-case basis. That’s the goal of the Justice Safety Valve Act, recently introduced by Sens. Patrick Leahy, D-Vermont, and Rand Paul, R-Kentucky.

To be sure, in some cases, such as particularly serious and violent crime, incarceration and longer sentences may be warranted. And some cities, like Chicago, are seeing a troubling increase in violence.

But Sessions’s directive goes far beyond reason and risks reigniting the same, misguided “war on drugs” that brought the nation’s criminal justice system to this crisis point, without doing anything to enhance public safety. Sessions’s arguments to the contrary should be dismissed for what they are: more of the Trump administration’s standard mix of half-truths and innuendo.

Chettiar is director of the Justice Program and Grawert is the John L. Neu justice counsel at the Brennan Center for Justice at the New York University School of Law.

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